India promises continued credit lines to Ethiopia

Addis Ababa, July 14 (IANS) The Exim Bank of India's line of credit (LoC) to African countries is growing in proportion to the Indian companies' interest in investing in the continent, says T.C.A. Ranganathan, its chairman and managing director.

"The Exim Bank of India has been actively engaged both on behalf of the government of India and on behalf of Indian companies with Africa, with Ethiopia in particular," Ranganathan told IANS here.

EXIM Bank has been extending credit in Africa for the past 15 years and in Ethiopia for about eight years. Till date, a more than $1 billion LoC has been provided for the development of three sugar companies in Ethiopia.

"We must assist Africa and partner with it in its development by offering whatever expertise we have," Ranganathan said.

The bank has also played a major role in the establishment of the Afriexim Bank by giving advisory support on the framework and type of activities it should focus on.

Exim Bank has partnered in setting up the Global Network of Exim Banks and Development Finance Institutions (G-NEXID) under the auspices of the United Nations Conference on Trade and Development (UNCTAD).

"We were the first chair of this network and also have a small share at the bank," Ranganathan stated.

During the second India-Africa Summit held in the Ethiopian capital in 2011, Prime Minster Manmohan Singh pledged $5 billion to African countries for their economic development.

"Trade finance is the first causality of a financial problem which occurs anywhere in the world. This financial support is mainly why we are actively and closely working with the governments of Ethiopia and other countries of Africa, to strengthen our relationship," Ranganathan pointed out.

He said Indian companies have invested in sectors like agriculture, steel, textiles and pharmaceuticals in Ethiopia because the quality of governance and planning is very advanced and the government is clear about its priorities.

With the increasing diversification of India's global trade towards other developing countries, the African region has emerged as an important partner for India. Ranganathan pointed out that trade with Africa has risen twelve-fold after 2000, from around $5 billion annually to $63 billion in 2011-12.

"Africa is a very strong focus as it is a continent that started developing very rapidly, especially in the the last four or so years. A lot of growth potential has been created and a number of activities are being carried out," Ranganathan said.

Exim Bank has also extended a $300 million LoC to the Ethiopian government for financing the new railway line between the Ethiopian city of Asaita and Tadjourah in Djibouti. The LoC was signed in New Delhi on June 13.

The Bank will reimburse 100 percent of the contract's value to the Indian exporters on the shipment of goods.

As per the agreement, the LoC will be used for sourcing goods and services from India.

Exim Bank has earlier extended six LoCs aggregating $705 million to Ethiopia - $65 million for financing an electricity transmission and distribution project and $640 million for developing the sugar industry.

It has in place 168 LoCs in over 75 countries in Africa, Asia, Latin America, Europe and the Commonwealth of Independent States (CIS), with credit commitments of over $8.87 billion for financing exports from India.